If you or your loved one is facing a challenging time during a personal injury lawsuit and can’t cope with the financial costs that result from protracted legal claims, don’t give up just yet. It is a known fact that pending settlements can take months or even years to pay out, and during such difficult times, bills don’t stop coming, which can be complicated for you to foot bills, especially if you are out of employment.
Getting money while waiting for a settlement can be a blessing when you need cash to tide you over financial hardships during a personal injury case. When you get an advance on your pending settlement, you can use it to cover almost any urgent expense, such as day-to-day expenses, medical bills, rent, and more.
But what if you have bad credit and no income as a result of your personal injury? Pre-settlement legal funding (or lawsuit loans), which evaluates the strength of your case as a primary deciding funding factor, may be an option to consider when other options are no longer available to you. Credit and income verification are not factors in getting approved.
This type of funding could give you the cash you need, where you only pay the money back if you win the case. However, due to the lack of regulation, you may still have some considerations about getting pre-settlement legal funding.
Here is what to know about getting an advance on a personal injury lawsuit and insights about legal funding practices.
How do advances on pending settlements work?
Contrary to popular misconceptions and myths about pre-settlement legal funding, they are nothing like traditional loans, where you have to pay back both the principal and interest over an agreed period. Because of the contingency basis of repayment, non-recourse cash advances based on pending lawsuits are only paid if you resolve your case and get paid. If, for whatever reason, you lose your personal injury claim; you get to walk away without repaying the borrowed amount while the lending company takes the loss.
Advances based on future settlements are also called lawsuit loans, and they are regarded as non-recourse financing since repaying the cash is contingent upon your case settling in your favor. While “lawsuit loans” and “settlement loans” are terms you may see when researching pre-settlement funding, these are marketing terms, and they all have the same meaning.
An advance on a lawsuit settlement depends upon the strength of your case. Funding companies primarily evaluate your legal case’s merits and potential settlement value in order to make a financing decision. Instead of focusing on your credit or employment history, like traditional banking applications, these advances factor the ability to win your lawsuit into account. For this reason, your attorney must participate in the process and demonstrate your claim’s worthiness to assess it and approve you for the required funds.
Your relationship with the legal funding company ends once a settlement is paid to you or when the court awards you damages. Your attorney then repays the lender the money they lent you, along with additional charges. You then receive the remaining amount to use at your will.
But most importantly, if you do not recover money from your case, the settlement funding company walks away without recovering the amount they lent you.
Pre-settlement legal funding can be used to pay for nearly any costs that result from your injury and the inability to generate income during a legal battle. In addition to the flexibility for the use of the cash advance, other benefits include competitive rates among lenders and quick turnarounds.
To get the best deal and the right estimate for the amount you need, it’s always best to have your attorney present during the process. Having your attorney present is an excellent way of ensuring that you understand the terms of the contract and that you don’t take out more than you need at any particular time.
How to qualify for the advance.
To find out if you can qualify to get pre-settlement legal funding, you must apply with a lender of your choice. The lender will then pre-qualify or disqualify your case for the advance.
Each pre-settlement legal funding company sets its own threshold for how much your case needs to be worth before releasing the advance. Funding providers typically have the following requirements to determine your eligibility, such as:
- They’ll require to speak to your attorney before proceeding with a decision. Delays can only occur if your attorney doesn’t respond on time. Your application will be denied if your attorney is non-responsive.
- Your legal battle needs to be strong enough to win and have a settlement worth over $50,000 to qualify for funding and additional loans if needed.
- You must live in a fundable state.
- You must be 18 years old age or older.
How to apply for the cash advance?
If you’re ready to apply for a settlement advance, follow these five simple steps:
- Apply online or by phone. Start by filling out the legal funding application form online. Once the application gets across, a funding expert will call you to finalize the acceptance of your case.
- Contact your attorney. Next, we will immediately contact your lawyer to discuss your case and get relevant documents about the nature of your claim. You need to ensure your attorney is present during the process.
- Case evaluation. After receiving the required documentation from your lawyer, you can let our team of professional underwriters take it up from there. Usually, you can get a funding decision within 24 hours. Lenders generally approve financing depending on the case value, damages, liability, and settlement value.
- Funding agreement. Once your attorney comes through with the necessary submissions and underwriting is satisfied, you will get approval, followed by a funding contract to be dually signed by you and your attorney.
- Disbursement of cash. Once the contract is signed and returned to us, we will credit your account with the agreed funding amount.
How many pre-settlement loans can you get?
Often, plaintiffs who have already taken an initial advance tend to ask if they can take out additional funding on a prospected settlement or jury verdict. Overall, additional legal funding is never off the table after an initial cash advance.
Typically, legal funding companies offer between 10% to 20% of the potential settlement value. For instance, if your case is worth $100,000, you can take out up to $20,000 in funding. If your case has settled for $100,000, you can get up to $20,000 in legal funding. Therefore, the requested advance cannot exceed the 10% or 20% mark if you want to get additional cash from your future settlement check.
Because of unforeseen circumstances that may play out amid litigations, consider limiting the amount you request to cater to your immediate needs. Lawsuits can take an unexpected turn, and it is best not to spend beyond your means. Taking out enough money to cover your financial needs boosts your chances of getting a second and even a third settlement advance. The idea behind requesting no more than your essential needs is to ensure you don’t exceed the 10% to 20% pre-settlement legal funding mark.
Also, depending on the lender, your attorney can negotiate a custom funding amount. Be careful with some lenders that charge extremely high rates because they could eat up your settlement or award once you win your case.
Applying for an advance can help you.
Many personal injury victims who are in the middle of a lawsuit need money to cater to financial commitments while waiting on the case to be resolved. And often, these lawsuits bring unnecessary financial problems that can be bigger than what you can handle. Unfortunately, when you have so many expenses to cover with no income, it’s hard to find a way out on your own without recurring to borrowing money somehow. However, there’s good news on that front.
With the pre-settlement legal funding option, you can get a cash advance from your future settlement or lawsuit proceeds with a no-win no-pay guarantee. Even if your credit score isn’t good and you are unemployed, it does not matter.
To learn more about any other aspect of pre-settlement legal funding, look to Baker Street Funding, and get help getting back on track with your finances.
The takeaway.
Finding yourself in a personal injury lawsuit and in a financial lurch is frightening. But taking the time to weigh the advantages and disadvantages behind pre-settlement legal funding may be helpful in choosing how much money you should borrow. Understanding the benefits and risks of advances based on pending settlements can help you assess whether this type of financing makes sense for your case’s outcome and current financial situation.
If you feel weighed down by mounting medical bills and expenses you cannot afford, it’s not too late to eliminate the burden. Baker Street Funding has the best hands backed by top-notch financing and legal professionals in efficiently evaluating pending settlement cases. After a claim evaluation, we will offer an amount that is suitable for your case.
At Baker Street Funding, we ensure best practices and transparent work ethics. This way, you are fully aware of what’s happening at every stage of the process.
Baker Street Funding offers pre-settlement loans with non-compounding interest rates for qualifying plaintiffs with pending lawsuits. Some legal funding agreements may be eligible for same-day settlement funding.
